Tracking Down the Advocates of Tax Evasion Strategies
Let's Talk About Tax Avoidance
The government is all about shaking things up when it comes to tax avoidance, and they're currently seeking the public's opinions on a bunch of new proposals. These changes aim to give the authorities more power and tougher penalties to effectively take down the promoters of these shady tax avoidance schemes.
The government's main objective is to bring about a significant change in their approach to tackling the small group of tax avoidance schemers still out there. This could potentially shrink the tax gap resulting from marketed tax avoidance.
So, what's the plan? The government has four main areas they're looking at:
- Expanding the Disclosure of Tax Avoidance Schemes (DOTAS) regime: While there isn't much new details on DOTAS expansion as of now, the authorities continue to encourage taxpayers and agents to report any suspicious tax avoidance activities. This push for transparency aligns with their broader efforts to combat tax avoidance.
- Introducing a Universal Stop Notice and Promoter Action Notice: These new enforcement tools are intended to stop tax avoidance schemes faster and target the promoters of avoidance more directly. The Promoter Action Notice is specifically designed to put a stop to those who design or market tax avoidance arrangements. These notices represent a more aggressive stance towards shutting down promoters and discouraging the propagation of these schemes.
- Tackling the controlling minds behind tax avoidance: Authorities are focusing on identifying and punishing the key individuals behind complex tax avoidance schemes, often referred to as "controlling minds." This focus on promoting and controlling minds reflects a shift from targeting only the users of avoidance schemes to also pursuing the masterminds.
- Exploring options for legal professionals: The government is considering regulatory or legislative changes affecting legal professionals involved in promoting or facilitating tax avoidance. This aligns with international trends in anti-money laundering and tax transparency.
Apart from these, the government is reforming several tax areas, including the treatment of carried interest, and revisiting transfer pricing and permanent establishment rules to bring them in line with OECD standards. Some of these changes are expected to come into effect from 2026.
In essence, the government's strategy to combat tax avoidance includes beefing up disclosure regimes, implementing immediate stop and promoter action notices, targeting the key players behind schemes, and considering regulatory measures affecting legal professionals, all as part of a broader overhaul of tax rules and enforcement tools.
The government's strategy to combat tax avoidance also involves exploring options for legal professionals involved in the promotion or facilitation of such practices, aligning with international trends in anti-money laundering and tax transparency. Additionally, the government is revising several tax areas, including the treatment of carried interest and revisiting transfer pricing and permanent establishment rules to align with OECD standards, with some changes expected to be implemented from 2026. This broader overhaul of tax rules and enforcement tools also encompasses policy-and-legislation changes in the realm of business and finance, intertwining with general news and politics.
